2005 (1) TMI 250 - AT - Central Excise

Summary

Issues involved: Availability of Modvat credit on duty paid for a Humidification plant imported by a company manufacturing textile yarn.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved the issue of whether M/s. Gontermann Peipers (I) Ltd. is eligible for Modvat credit on duty paid for a Humidification plant imported by them. The company imported the plant in parts and components to maintain the desired level of humidity for producing quality cotton yarn. The Department disallowed the Modvat credit, claiming the products were classifiable under a different Tariff Heading. The Commissioner (Appeals) had allowed the appeal, and the Tribunal, in a previous decision, had also allowed Modvat credit for a similar case. The Revenue argued that the imported goods fell under a Tariff Heading specifically excluded from the definition of capital goods under the Central Excise Rules. However, the Tribunal found no merit in this argument. The Tribunal noted that the assessment of the goods was done under different Headings by the Customs House, which was not challenged by the Revenue. The Tribunal emphasized that the classification of capital goods cannot be altered by the Central Excise authorities at the recipient's end. Since the relevant Headings were not excluded from the definition of capital goods, the Modvat credit was deemed available to the Respondents. Consequently, the appeal filed by the Revenue was rejected by the Tribunal. The judgment was pronounced in Open Court by the Tribunal.